When I first began selling real estate in 1987, I rarely encountered a self employed person who could buy a house. Unless the individual had a few years of success (accompanied by income tax assessment notices) under their belt, institutional money was not available to them. Banks would not lend them money for a house. (They wouldn't lend them money for anything else come to think of it.)
I don't really consider doctors and lawyers to be in this category. Banks generally have an open-vault policy in regards to these professions.
Retailers and service providers on the other hand were to be avoided. Occasionally I could find a private lender who would work with an entrepreneur but only if the down-payment was substantial. Even then, the interest rates charged were prohibitive.
Then came the 1990 recession. Our local economy was transformed from a manufacturing economy to a service industry based system and all of a sudden, the thousands of unemployed factory workers were seeking other ways to make a living. I don't have the statistics at my fingertips but anecdotally, the clients and friends I worked with at that time were finding lower paying, part time work and many were exploring the notion that they could perhaps begin their own business.
Gradually, the banks followed suit and the lending climate changed quite dramatically, Now, the self employed still have to provide income tax assessment notices but there's much more money available to them should they decide to buy a house or condo. In fact, it appears the dramatic changes in the auto industry and the energy sector (to name two) are forcing us to redefine our employment priorities once again and thankfully, this new lending climate will enable many of these people to enter the market. Nowadays, many of my clients are self employed and there is no longer a wall of fear preventing them from accessing money.
Self employment and real estate are intertwined in one other important way of course. I wonder how many new business ventures are funded by borrowing against the equity in a home.
Oh, one more thing. I did some digging and discovered that the Martin Prosperity Institute (Rotman School of Management, U of T) estimate the average entrepreneur makes three attempts at setting up a business before he/she succeed. That's a lot of failed businesses folks.
